A leading company oriented to virtual transformation.
Financial technology is booming as the coronavirus pandemic forces a replacement in the way consumers with monetary services from banking, credit, investment and more, virtual players have noticed that their business is increasing.
Brazil’s fast-growing bank, Nubank, has also benefited from 5. 9 million consumers by the end of 2018 to 30 million now, CEO and co-founder David Velez told Business Insider.
“We’ve reached a very giant scale where we have 30 million customers, which makes us much bigger than any other challenger in the world,” he said in an interview.
“It’s another market, yes, but also another model. Others in debit, but we on credit cards, which are a higher source of income market with higher margins.
Founded in 2013, Nubank has raised $ 1. 4 billion to date and is one of the most valuable and best-funded generation startups in South America.
The last 18 months have been a whirlwind for the company, with a decancorn valuation of $10 billion, and its sponsors come with investment and venture capital giants Sequoia Capital, TCV, Tencent, Goldman Sachs, DST Global and Tiger Global.
The center of the company’s proposal, a free credit card combined with a payment tracking app, has helped attract millions of customers, especially millennials, to a traditionally unbanked country.
Brazil’s population is about 210 million, but about a quarter of that population, or 55 million, is bankrupt, according to a fintech Bexs study.
At the time of Nubank’s creation, Brazil’s interest rates were around 9%. In August of this year, the central bank reduced them to an all-time high of 2%.
Vélez estimates that this resolution leaves some one hundred million Brazilians with deposits in the country’s top five banks, which now rate rates above yields.
As a result, the country’s finance minister lamented last year the “excessive” gains and lack of partying in the Brazilian banking sector, led through Ita-Unibanco.
Since Brazilian investors get some of the gross transactions from large banks, simplifying fair investment in stocks is now a key component of Nubank’s offering.
Last August, Nubank acquired Easynvest, in the past subsidized through the U. S. personal equity company Advent, in a money-equity transaction with an unreclosed valuation. This was the company’s third acquisition this year. Easyvest already had about 1. 5 million consumers and was one. of the first corporations to offer Brazilians online access to funds, stocks, functions and futures.
“We looked at the place of the market and the spaces where we can make a difference and the investments crowned the list,” Vélez said. “We are seeing this significant shift towards stocks, so our time to reach the market site has been reduced, we have mergers and acquisitions and we are well adapted to Easynvest.
“We used to have a more biological strategy, but we have technological experience in the investment area to temporarily create a giant footprint,” he added.
Nubank’s virtual simplicity has brought its good luck to date. Banking is a bureaucratic and bureaucratic procedure riddled with documents in South America’s largest country, with many state-state banks perceived as hostile places to stop with armed guards and intense security. There has already been talk of the painful banking jolgorio in Brazil, adding to being trapped in armored revolving doors in Sao Paolo.
Like its peers as Monzo in the UK, Nubank’s visitor acquisition prices are low. Velez stated that fintechs spent almost nothing on marketing and in the past noticed that 80% of visitor referrals were word of mouth.
Nubank has also grown its young population outdoors, thanks to the pandemic.
“The pandemic has accelerated to virtual banking, but not only for millennials, but also for the over-60s,” Vélez said, adding that the product “is not yet smart enough or undeniable enough for larger demographic groups. “
Nubank has hired a lot of visitor service operators for non-digital natives and is looking to reduce the length of its smartphone app, which would possibly be too big for some phones, he added.
However, at the height of the crisis in April, Nubank said it saw a slowdown in expansion as travel and transaction spending declined, but Vélez added that fintechs are now above pre-COVID levels, having continued to grow and supply resources throughout the year. .
The company’s approximately 2,700 painters went 100 percent overnight, sending computer appliances and ergonomic chairs to top painters to help them paint from home, Vélez. Nubank said in a position for the pandemic after reading Sequoia’s black swan memo, he added.
Despite the pandemic, Nubank adds about 40,000 consumers a day, Vélez said.
Profitability remains a brand that weighs even on giant fintechs that climb giant rounds to ever-higher valuations.
Advanced fintechs earned huge sums of cash in 2020, with American neobank Chime and European payment company Klarna for mega-agreements.
Velez said Nubank had positive money and that his income increased as losses decreased.
In its first-half monetary statements, the company said its net loss fell by 32% since the first part of 2019, while revenue doubled.
“We are not profitable, but we are positive for the flow of money,” Vélez said. “It is not a challenge for us, there is not so much funding available in Brazil, so we have never afforded to expand at all costs. . “
Mexico is now a major market for Nubank.
Like Brazil, the Mexican population is young, does not have enough banking services and the sector is in a position to suffer disruption.
“We have a strategy to focus on deepening, so for now we’re complete with Brazil and Mexico,” Vélez said. Despite “many returns” from investors, Vélez says fintech generate money and that his investment in Mexico Expansion is fully funded. Nubank said that while the market is fashionable for fintech, additional investments “are not something we’re ahead of right now. “
Beyond credit, investment and lending, Vélez is encouraged by the expansion of Nubank’s enterprise banking product, which he says is a great opportunity in Brazil, as SMEs and marketers are a giant component of the country’s workforce.